Monday, May 19, 2008
Wake Up Home Of The Free!
Economic short term planning is destroying the American Industrial Base. It would seem that CEO's are thinking and planning for simple short term gains. Sure, if you layoff half of your workforce and cut your maintenance and R&D budgets in half your quarterly profits are going to rise and all the shareholders will get a bigger dividend but what about next year when you can no longer supply the same quality in your products or produce the same amount of products.
The whole downsizing theory is a short term profit stunt that will continue until there are no assets left to sell off, no employees left to layoff and no industry at all. Does the CEO with a two year contract care? I doubt it. He made his millions and his bonuses doing exactly what he was contracted to do. Make a profit for the shareholders at all costs. After he's gone what happens to the shareholders when there is no industry left to profit from?
The argument that always seems to pop up is market demand. "Demand is shrinking so we don't need "X" so we can sell it all off and make a profit this quarter" For me that is total shortsighted BS, Where is the sales force and why aren't they taking a chance on breaking into new markets? Take a look at the historical example of IBM. They had a product, not a great product in fact there were much better products in the market. What they did have, was a Grade A #1 sales force that created new markets. Companies that never even knew what a computer was or did and got at long with out one for years had to have one after the IBM sales rep was finished with them.
Where is the reinvestment? If you want customers to buy your product you have to make better then your competitions product, so much better that no body would even think of buying your competitors product. How do you do that? Capitol reinvestment in research and development. Making your products newer and better all the time. Reinvesting in your equipment to make it more efficient and produce a higher quality product. Investing in your employees to reduce your turnover rate and maintain your core knowledge and keep it from going to your competition.
This isn't rocket science... Short term planning and short term profits are foolhardy.
The American industrial base is dying thanks to short term planning and profits,
Manufacturing is the river from which all financial gain flows.
Shipping all the manufacturing overseas throws quality out the windows tied to an anchor and nobody seems to care.
The whole WTO and global market is BS. For example if a foreign country lets say China subsidies its industrial base and encourages their companies to dump products on the US market at a net loss in order to drive the US competition into bankruptcy and the WTO condones this and complains when the US levy’s a tariff?!? This is suppose to be fair and balanced?!?
Right now Japan, China, Russia and Brazil are subsidizing their manufacturing base (IE the government is giving them money, IE they can make products at a much much lower cost) then shipping them to the US (Think about that, they can pay to ship the products across the ocean and still sell them cheaper) Not to mention that most of the workers in these countries are making a dollar a day. It would seem that the WTO (World Trade Organization) will not be happy until all the Americans are working for a dollar a day as well.
Tariffs are there for a reason. To protect the US manufacturing base against unfair trade practices. Why aren't we using them?
At one point America built everything.... The quality was fantastic. Engineered obsolescence was unheard of. From the consumer standpoint you bought something and it lasted a life time. The engineers worked with slide rules and drafting tables and didn’t know all the variables but they did know that if they built it twice as strong at they think it needed to be that they would be safe the result of this was very durable products.
Where did it all go so very very wrong???
Well as they say that’s my two cents.